Tesoro Corporation Stock Buy Recommendation Reiterated (TSO)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Tesoro Corporation (NYSE: TSO) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 7.1%. Since the same quarter one year prior, revenues slightly increased by 7.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, TSO's share price has jumped by 42.94%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, TSO should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • TESORO CORP's earnings per share declined by 19.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TESORO CORP turned its bottom line around by earning $3.76 versus -$0.23 in the prior year. This year, the market expects an improvement in earnings ($6.93 versus $3.76).
  • Despite currently having a low debt-to-equity ratio of 0.36, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.92 is weak.

Tesoro Corporation, together with its subsidiaries, engages in refining and marketing petroleum products in the United States. It operates in two segments, Refining and Retail. Tesoro has a market cap of $5.28 billion and is part of the basic materials sector and energy industry. The company has a P/E ratio of 8.9, below the S&P 500 P/E ratio of 17.7. Shares are up 61% year to date as of the close of trading on Thursday.

You can view the full Tesoro Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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